Electric vehicles don’t need subsidies now, says Gadkari

Amid uncertainties related to the continuity of incentives for electric vehicles, the Minister of Road Transport and Highways Nitin Gadkari said he feels the electric vehicle industry no longer needs subsidies.

“Now the electric vehicles, they don’t need subsidy. When we increase the number, the cost of vehicle is going to reduce,” Gadkari said while speaking at the Bloomberg NEF Summit on Thursday.

“Today, the demand has increased, volumes have increased, cost has reduced. This is the time that you can have a good domestic market and international market. My personal feeling is now we don't need too much subsidies," he said. 

He noted that the tax difference between petrol and diesel vehicles and electric vehicles already gives a big advantage for the electric vehicles industry. The tax on ICE vehicles goes up to 48%, while that on electric vehicles is just 5%.
It was unclear whether he meant subsidies given for manufacturing electric vehicles, or on the purchase of electric vehicles through the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme.

Highlighting the growth in the manufacturing of electric vehicles, Gadkari also said, “Today, I feel that it doesn’t need any support from the government.”

His comments come at a time when the electric vehicle industry is expecting the government to launch the third leg of the FAME.

Electric vehicle adoption in India is still in the low single digits, driven mostly by two three-wheelers, and the government has set a target of 30% by the end of the decade. The FAME scheme has been instrumental in driving the early-stage aadoption of electric vehicles by providing demand incentives. 

However, when asked about the rollout of FAME 3, Gadkari said, “FAME subsidy is a good subject. It is not related to my ministry.” 

The FAME scheme is under the Ministry of Heavy Industries.

On Wednesday, Minister of Heavy Industries HD Kumaraswamy said the government will clear the FAME 3 scheme in one or two months. The third phase of the FAME scheme is set to replace the temporary Electric Mobility Promotion Scheme (EMPS) 2024, which was rolled out in April and expires by the end of September.